“Make sure you pay your taxes; otherwise you can get in a lot of trouble.”
– Richard M. Nixon
IT’S tax-filing time again. It’s also usually the time when people’s true character comes to the fore.
The Bureau of Internal Revenue—the government’s largest tax collection agency contributing more than three-fourths of the country’s revenue collections—reported higher tax-take in 2015, but fell short of target for the year. What’s new? Same thing happens every year—in the last five years at the very least—based on BIR data.
Wishful thinking, some would say, but for Donnies Alas, founder, chairman, and chief executive officer of local accounting firm Alas Oplas & Co., the government’s tax collection would improve a lot if only big businesses would do their part—“no ifs, no buts”—and all entrepreneurs should honestly pay the correct taxes.
Even Finance Secretary Cesar Purisima was quoted in an online news report saying the Philippine gross domestic product can improve by as much as three percent from taxes alone, if only Filipinos, especially the professionals, pay the right taxes.
For Alas, those who don’t honestly pay their taxes cannot rightfully question the government as to where it is spending the people’s money.
“How will you demand (an explanation) if you, yourself, cannot honestly say you’re doing your fair share of paying the right taxes?” asked Alas, who was 2014 president of the Association of CPA in Public Practice (ACPAPP), covering nearly 1,000 individual and institutional members nationwide.
It is not a secret that some public accountants would compromise truth in aiding clients, who want to get away with paying the right taxes, hiding business income as personal savings and sometimes, even writing off personal expenses as if they were business expenses.
It is also not uncommon, though, that some tax examiners exact too much from poor taxpayers.
It takes two to tango. But for Alas, the best and easiest thing to do is to stick to the truth, for one lie leads to another until it is just too much to bear.
“Fear can kill,” Alas says, especially when guilt is there.
After 25 years as a certified public accountant, in some point under the country’s top auditing firms, Alas put up accounting firm Alas Oplas & Co., CPAs.
Integrity and genuine desire for growth, he says, is what drives his more than two decades old accounting firm, which caters to mid-tier companies, mostly startups.
“Assisting clients to comply with tax laws is more profitable for us,” Alas says. “We’d rather get 10 clients with 10 problems than 100 clients with a thousand problems.”
For Alas, the basic accounting principle is it is always better to right what’s wrong than to make what’s wrong appear to be right.
“In the end, you’ll be overwhelmed by the consequences of your lies,” he said, adding that guilt and fear can sometimes kill a person.
Alas relates that when faced with a client with messy financial records, his company would always advise the client to clean up its act and change ways for good.
He says this is especially beneficial to family businesses that are passed on to the younger generation.
“We tell business owners—in the end, their children would hate them if their children inherit a business with messy tax papers,” he points out.
In short, as per Alas, it always pays to settle taxes above board, for peace of mind.
Alas says government’s tax amnesty schemes—where taxpayers are allowed to pay only as much as they think they should and then start new tax records—are an attempt to clean up taxpayers’ papers and collect more taxes.
“The hardest thing in the world to understand is the income tax.”
– Albert Einstein
He says tax amnesties are a good thing, as these make the government collect somehow and give the taxpayers a clean slate and the government’s tax collectors a fresh start, thus, an easier time.
Alas says Alas Oplas’ clients have 100-percent tax compliance.
“We even challenge the tax examiners to open our clients’ books and tell us if they see anything wrong,” he says, “and they, the tax examiners, will soon stop bothering our clients.”
Alas says under-the-table arrangements with tax examiners have no place in his company’s dealings with clients. Otherwise, he says, the tax examiners, not to mention guilt and fear, would never stop bugging their clients.
Alas Oplas & Co., CPAs is an independent member of BKR International, a top global group of independent accounting and business advisory firms from 80 countries.
Call for tax reforms
According to Alas, the Philippine tax system is crying out for reforms, especially with the economic integration of the Association of Southeast Asian Nations (Asean).
“To me, the Philippine tax system is still below international standards,” he opines, pointing to the income tax rates, among the highest in the region, as needing correction the most.
To Alas, the up-to-30-percent income tax rate slapped on salaried Filipinos is exorbitant.
“It is only fair to give the people a reprieve from higher taxes,” he says. “And this will make them even more productive.”
Alas points out that while income tax in Singapore is only 17 percent, its economy is “very progressive.” Which means, he says, higher tax rates don’t result in higher tax collection, and inversely, lower tax rates encourages compliance and productivity.
“To me, exacting too high taxes from people is like communism or socialism, where people are forced to give too much of their hard-earned money just so the government can spend for public services,” he says.
Computerization is another tax matter that Alas and his partners are pushing for—both from the taxpayers’ and the government’s ends.
“As for our clients, we encourage them to computerize their books, so it’s easier for them to track their finances, including taxes,” he says. Therefore, killer stress is avoided.